2013 (12) TMI 465 - AT - Income Tax

Whether any income accrued or arosed in the hands of the assessee joint venture Held that - Following IVRCL-KBB-MEIL(JV) 2012 (10) TMI 563 - ITAT HYDERABAD - If the entire business/contract receipts received by the JV are transferred to the constituent members of the JV - There is no accrual of income in the hands of the assessee-JV But if there is retention of any portion of contract receipts received by the JV, it has to be taxed in the hands of the assessee in accordance with law The issue was restored back to the files of AO. Validity of Demand notice issued The assessment order for A.Y. 2003-04 passed under S.143(3) was signed by ITO Ward 7(1) Hyderabad on 20.6.2005 - The demand notice under S.156 dated 23.12.2008 was issued by the DCIT Circle 16(3) and served on the assessee on 29.12.2008 - Held that - Following CIT V/s. Purshottamdas T.Patel 1993 (8) TMI 21 - GUJARAT High Court - In the absence of any evidence to indicate that the assessment orders were ever issued to the assessee earlier - The demand notice in terms of section 156 was served on the assessee only on 29.12.2008 - The assessments for the years under appeal to be barred by limitation in terms of section 153 Decided against Revenue.

Summary

Issues:
1. Assessing whether any income accrued or arose to be assessed in the hands of the assessee.
2. Validity of assessment orders for the assessment years 2003-04 and 2004-05.

Issue 1: Assessing whether any income accrued or arose to be assessed in the hands of the assessee:
The judgment involved four appeals, two by the assessee and two by the Revenue, directed against separate orders of the CIT(A) V, Hyderabad for the assessment years 2003-04, 2004-05, 2006-07, and 2007-08. The appeals were heard together due to common issues. The main issue was whether any income accrued or arose to be assessed in the hands of the assessee. The Tribunal referred to previous decisions in similar cases and concluded that if the entire business/contract receipts received by the Joint Venture (JV) are transferred to the constituent members/JV, there is no accrual of income in the hands of the assessee-JV. However, if any portion of contract receipts is retained by the JV, it should be taxed in the hands of the assessee. The Assessing Officer was directed to reverify the relevant accounts and redecide the assessability of any income accordingly. The appeals of the assessee for the assessment years 2006-07 and 2007-08 were allowed for statistical purposes.

Issue 2: Validity of assessment orders for the assessment years 2003-04 and 2004-05:
The Revenue's appeals were against the CIT(A) declaring the assessments for the years 2003-04 and 2004-05 as ab initio null and void. The CIT(A) held that the assessment orders were issued beyond the time limit prescribed by law. The assessment orders were signed by one officer but the demand notices were issued by a different officer at a later date. The CIT(A) relied on relevant case laws to support the decision. The Tribunal upheld the CIT(A)'s orders, stating that the assessments were barred by limitation under the Income-tax Act. The appeals of the Revenue for the years 2003-04 and 2004-05 were dismissed.

In conclusion, the judgment addressed the issues of assessing income accrual in the hands of the assessee and the validity of assessment orders for specific years. The decision was based on the principles of income transfer within a JV and adherence to statutory time limits for assessment orders.